Swiping With Care: 10 Ways To Use Credit Cards Responsibly

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Swiping a credit card with reckless abandonment may feel fun and carefree — until you get your bill in the mail. The elation you feel with every purchase can quickly turn to despair if you’ve inadvertently stacked up debt you aren’t able to immediately repay.
Make your credit cards work for you, not against you, by following these 10 best practices for using credit cards responsibly.

1. Be strategic when you swipe

Plan your credit card use in advance whenever possible. Sure, last-minute emergencies come up, but it’s a good idea to have a plan in place for how you’ll use your credit card after it arrives in the mail. Some people put everything on a credit card to rack up rewards. Others save credit card use for large purchases, so they have the perks and protection without racking up lots of little charges. There is no right or wrong strategy— just stick with what works best for you.

2. Sign up for automatic payments

Make sure you don’t miss a payment and ding your credit score (and wallet) with late fees and interest payments by enrolling in your card’s auto pay option. You can select to pay only the minimum amount due or the entire balance or an amount in between. No matter what you choose, you’ll be protected from that forehead-slap-forgot-to-pay-the-bill moment. Also, it’s worth a call to your credit card company to see if you can schedule your payment for a time near your payday, so you’re sure to have cash to cover the payment and avoid overdraft fees.

3. Pay your balance in full every month

The best strategy for building wealth and using credit cards is to pay your balance in full every month. You’ll get the all pluses of using a credit card without the big minus — compound interest. If you pay off the balance, you’ll never pay interest. It’s basically like getting a free loan from the bank with rewards to boot.

4. Check your statement regularly

Monitoring what you’re spending on your credit card is a great way to avoid that kicked-in the-gut sensation that can happen when you open a bill with more zeros than you anticipated. Review any paper statements as soon as you get them, or make it easy on yourself by logging in regularly to your online account. In addition to staying on top of your balance, you may find erroneous charges that you can address immediately.

5. Sign up for email reminders and text alerts

Enroll in text or email notifications if your credit card company offers them. Some companies will send you your balance by text, let you know if you’re getting close to your spending limit, or inform you of upcoming payments.

6. Keep spending below 30 percent of your card limit

It’s a good idea to stay clear of your credit card limit if you want to keep your credit score up. Keep the balance below 30 percent of your available credit. This will show lenders that you’re in control of how much credit you use and it leaves credit available for a true emergency.

7. Know your perks

Put the time you spend researching the perfect credit card to good use by knowing and using your perks. One great source of information is the pamphlet you get in the mail when you sign up. True, reading the fine print can be boring, but it can also be revelatory. Your credit card may have extras you knew nothing about, such as concierge services for upcoming concerts or VIP access to sales. Also, it pays to know exactly how the card’s price adjustment policy works, or what is covered in the event of loss or theft.

8. Do a bit of research before spending rewards

Take a few minutes to calculate a reward’s value before cashing it in. Not all forms of redemption are created equal, and you don’t want to waste your precious cash back rewards or airline points on a bad deal. Get the biggest bang for your buck by doing a bit of number crunching — how much would this item or service cost compared with how much you’ll need to redeem?

9. Space credit card applications appropriately

Applying for a handful of credit cards at once can negatively impact your credit score. It’s best to space credit card applications out — experts say every six months is ideal.

10. Use what you’ve got

Make sure you use all your credit cards at least once a year. Some card companies cancel cards that aren’t used frequently enough. Consider setting up a recurring payment on the card, such as your gym membership, to make sure it is getting use. If you can cancel a card that you don’t use frequently it could impact your credit rating, but it may be worth it if the card has an annual fee. Again, doing the math is the best way to find out.

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